Essential Benefits

Starting
on January 1, 2014, all health insurance policies will be required to cover a
broad range of mandated benefits, many of which are not included in some
policies today. As a result, millions of
people will be forced to purchase health insurance that is more comprehensive –
and more expensive – than they currently have. The CBO found that premiums
would increase because policies “would cover a substantially larger share of
enrollees’ costs for health care (on average) and a slightly wider range of benefits.”

Infographic

Ten Categories of
Coverage

The
ACA outlines 10 general categories of benefits that have to be included in any
policies offered in the “exchange” as well as plans sold in states’ small-group
and individual markets:

According
to the U.S. Department of Health and Human Services, many individuals and
families purchasing coverage on their own do not currently have coverage for
some of these services, such as maternity services (62 percent), substance
abuse services (34 percent), mental health services (18 percent), and
prescription drugs (nine percent).

As the non-partisan Institute of Medicine noted in its recommendations to HHS:

"If cost is not taken into account, the EHB package becomes increasingly expensive and, individuals and small businesses will find it increasingly unaffordable. If this occurs, the principal reason for the ACA - enabling more people to purchase health insurance, and covering more of the population will not be met."

New Benefit
Mandates

The ACA also imposes other benefit mandates, some of which have already gone
into effect, such as first-dollar coverage for preventive care, no annual
limits on coverage, and no lifetime limits on coverage. The ACA also establishes limits on
deductibles for health insurance plans in the small group market at $2,000 for
individuals and $4,000 for families—effective January 1, 2014. In order to meet these new limits, many small
group plans—particularly high-deductible/HSA plans—would have to lower deductibles
substantially, thereby increasing the cost of coverage.

Minimum Actuarial
Value

The
exchanges establish different tiers of coverage based on the “actuarial value”
of a health insurance policy. Actuarial value is a summary measure of a health
insurance plan’s benefit levels—measuring the relative percentage paid by a
health benefits plan and its enrollees for a standard/average population. For example, a plan with an actuarial value
of 70% means that the insurance plan would pay 70% of covered health care
expenses—while the enrollee would pay 30% out-of-pocket in the form of
co-payments, co-insurance, and deductibles. The most affordable tier, known as
the “bronze” tier, will require a minimum actuarial value of 60 percent – which
likely represents a higher actuarial value that many plans purchased today in
the individual market which, in turn, would result in higher premiums for those
plans.

AHIP has launched Time for Affordability to raise awareness of how essential health benefits and other provisions will affect premiums.

A new report from Milliman, Inc. helps explain how the Affordable Care Act’s (ACA) coverage expansion, new benefits, and market reforms will impact individual market health insurance premiums in 2014. The report highlights how some provisions will increase premiums while others will make health care coverage more affordable for consumers. The focus of this report is to highlight the broad range of changes happening in the marketplace and the wide variation in impact that is likely to occur.

America’s Health Insurance Plans’ (AHIP) President and CEO Karen Ignagni released the following statement in response to the final rule on essential health benefits released today by the U.S. Department of Health and Human Services.

Testimony from Carmella Bocchino, Executive Vice President of Clinical Affairs and Strategic Planning for AHIP, who participated on a panel discussion at the Institute of Medicine’s (IOM) meeting on the determination of essential health benefits.